Tuesday, February 2, 2010

Revenge of the Laffer Curve, Part III.

The bloodsuckers and leeches in the U.K. government are a bit more honest than their counterparts in the United States. Unlike the American revenue-estimating system, which assumes higher tax rates raise revenue, the British bureaucracy admits that the new 50 percent tax rate will raise very little revenue. The UK-based Times reports:

High earners will cost the public purse hundreds of millions of pounds through tax dodges as they avoid the new 50p rate of income tax, a minister indicated yesterday. Lord Myners, the City Minister, said that the Treasury had “significantly reduced” its estimate of the revenue to be earned from the historic change. ...Lord Myners told peers that “behavioural consequences of the new higher rate of taxation” — shorthand for tax avoidance — had forced the Treasury to lower its expectations. ...Mike Warburton, senior tax adviser at Grant Thornton, one of Britain’s biggest accounting firms, said...“People are taking obvious avoidance measures because they are not prepared to pay 50 per cent tax”... “People were prepared to pay 40 per cent but the Treasury don’t seem to understand what drives people. The minister has at last admitted that the 50 per cent tax rate was a blatantly political measure and not designed to raise new revenues. This is all to do with the politics of envy.” Lord Myners said that there were “very small numbers of people” who appeared to have moved abroad as a result of the tax change.

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